NATURE AND FORM OF THE CONTRACT

It is a contract where one of the contracting parties obligates himself to transfer the ownership and to deliver a
determinate thing, and the other to pay therefor a price certain in money or its equivalent.
Answer: Contract of sale

A contract of sale may be?

Answer: Absolute or conditional.

The thing must be licit and the vendor must have a right to transfer the ownership thereof at the time of?
Answer: Time it is delivered.

A thing is determinate when it is particularly?

Answer: designated or physical segregated from all other of the same class.

The requisite that a thing be determinate is satisfied if at the time the contract is entered into, the thing is capable of
being made determinate without the necessity of?
Answer: A new or further agreement between the parties.

Note: Things having a potential existence may be the object of the contract of sale.

It is deemed subject to the condition that the thing will come into existence.
Answer: The efficacy of the sale of a mere hope or expectancy

The sale of a vain hope or expectancy is?

Answer: Void.

The goods which form the subject of a contract of sale may be either?
Answer:
1. Existing goods, owned or possessed by the seller,
2. Goods to be manufactured, raised, or acquired by the seller after the perfection of the contract of sale, in this Title
called "future goods."

Note: There may be a contract of sale of goods, whose acquisition by the seller depends upon a contingency which
may or may not happen.

The sole owner of a thing may sell an undivided interest therein.

In the case of fungible goods, there may be a sale of an undivided share of a specific mass, though the seller purports
to sell and the buyer to buy a definite number, weight or measure of the goods in the mass, and though the number,
weight or measure of the goods in the mass is undetermined. By such a sale the buyer becomes?
Answer: Owner in common of such a share of the mass as the number, weight or measure bought bears to the
number, weight or measure of the mass.

If the mass contains less than the number, weight or measure bought, the buyer becomes the owner of the whole
mass and the seller is bound to?
Answer: Make good the deficiency from goods of the same kind and quality, unless a contrary intent appears.

Note: Things subject to a resolutory condition may be the object of the contract of sale.

What must be considered in construing a contract containing provisions characteristic of both the contract of sale and
of the contract of agency to sell?
Answer: The essential clauses of the whole instrument shall be considered.

A contract for the delivery at a certain price of an article which the vendor in the ordinary course of his business
manufactures or procures for the general market, whether the same is on hand at the time or not, is a contract of sale,
but if the goods are to be manufactured specially for the customer and upon his special order, and not for the general
market, it is a contract for?
Answer: Contract for a piece of work.
If the consideration of the contract consists partly in money, and partly in another thing, the transaction shall be
characterized by the?
Answer: Manifest intention of the parties.

If such intention does not clearly appear, it shall be considered a barter if?
Answer: The value of the thing given as a part of the consideration exceeds the amount of the money or its equivalent;
otherwise, it is a sale.

In order that the price may be considered certain, it shall be sufficient that it be so with reference to?
Answer: Have reference to another thing certain, or that the determination thereof be left to the judgment of a special
person or persons.

Should such person or persons be unable or unwilling to fix it, the contract shall be?
Answer: Inefficacious, unless the parties subsequently agree upon the price.

Who may fix the price if the third person or persons acted in bad faith or by mistake?
Answer: The courts may fix the price.

Note: Where such third person or persons are prevented from fixing the price or terms by fault of the seller or the
buyer, the party not in fault may have such remedies against the party in fault as are allowed the seller or the buyer, as
the case may be.

Gross inadequacy of price does not affect a contract of sale, except?

Answer: It indicate a defect in the consent, or that the parties really intended a donation or some other act or contract.

If the price is simulated, the sale is?

Answer: Void, but the act may be shown to have been in reality a donation, or some other act or contract.

The price of securities, grain, liquids, and other things shall also be considered certain, when the price fixed is that
which the thing sold would have on?
Answer: A definite day, or in a particular exchange or market, or when an amount is fixed above or below the price on
such day, or in such exchange or market, provided said amount be certain.

The fixing of the price can never be left to the discretion of?
Answer: One of the contracting parties.

However, if the price fixed by one of the parties is accepted by the other, the sale is?
Answer: Perfected

Where the price cannot be determined in accordance with the preceding articles, or in any other manner, the contract
is?
Answer: Inefficacious.

However, if the thing or any part thereof has been delivered to and appropriated by the buyer he must pay a
reasonable price therefor. What is a reasonable price is a question of fact dependent on?
Answer: The circumstances of each particular case.

The contract of sale is perfected at the moment there is?

Answer: A meeting of minds upon the thing which is the object of the contract and upon the price. From that moment,
the parties may reciprocally demand performance, subject to the provisions of the law governing the form of
contracts.

Note: In the case of a sale by auction:

(1) Where goods are put up for sale by auction in lots, each lot is the subject of a separate contract of sale.
(2) A sale by auction is perfected when the auctioneer announces its perfection by the fall of the hammer, or in other
customary manner. Until such announcement is made, any bidder may retract his bid; and the auctioneer may
withdraw the goods from the sale unless the auction has been announced to be without reserve.
(3) A right to bid may be reserved expressly by or on behalf of the seller, unless otherwise provided by law or by
stipulation.
(4) Where notice has not been given that a sale by auction is subject to a right to bid on behalf of the seller, it shall not
be lawful for the seller to bid himself or to employ or induce any person to bid at such sale on his behalf or for the
auctioneer, to employ or induce any person to bid at such sale on behalf of the seller or knowingly to take any bid
from the seller or any person employed by him. Any sale contravening this rule may be treated as fraudulent by the
buyer.

The ownership of the thing sold shall be transferred to the vendee upon?
Answer: The actual or constructive delivery thereof.

The parties may stipulate that ownership in the thing shall not pass to the purchaser until?
Answer: He has fully paid the price.

A promise to buy and sell a determinate thing for a price certain is reciprocally?
Answer: Demandable

An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor
if?
Answer: The promise is supported by a consideration distinct from the price.

Note: Any injury to or benefit from the thing sold, after the contract has been perfected, from the moment of the
perfection of the contract to the time of delivery, shall be governed by Articles 1163 t o 1165, and 1262. This rule
shall apply to the sale of fungible things, made independently and for a single price, or without consideration of their
weight, number, or measure. Should fungible things be sold for a price fixed according to weight, number, or measure,
the risk shall not be imputed to the vendee until they have been weighed, counted, or measured and delivered, unless
the latter has incurred in delay. (1452a)

In the contract of sale of goods by description or by sample, the contract may be rescinded if?
Answer:
1. The bulk of the goods delivered do not correspond with the description or the sample, and
2. If the contract be by sample as well as description, it is not sufficient that the bulk of goods correspond with the
sample if they do not also correspond with the description.

The buyer shall have a reasonable opportunity of comparing the bulk with?
Answer: The description or the sample.

Whenever earnest money is given in a contract of sale, it shall be considered as part of?
Answer: The price and as proof of the perfection of the contract. (1454a)

Subject to the provisions of the Statute of Frauds and of any other applicable statute, a contract of sale may be made
in?
Answer:
1. Writing, or
2. By word of mouth, or
3. Partly in writing and partly by word of mouth, or
4. May be inferred from the conduct of the parties.

In a contract of sale of personal property the price of which is payable in installments, the vendor may exercise any of
the following remedies:
Answer:
(1) Exact fulfillment of the obligation, should the vendee fail to pay;
(2) Cancel the sale, should the vendee's failure to pay cover two or more installments;
(3) Foreclose the chattel mortgage on the thing sold, if one has been constituted, should the vendee's failure to pay
cover two or more installments. In this case, he shall have no further action against the purchaser to recover any
unpaid balance of the price. Any agreement to the contrary shall be void.

The preceding article shall be applied to contracts purporting to be leases of personal property with option to buy,
when the lessor has deprived the lessee of the possession or enjoyment of the thing.
In the case referred to in two preceding articles, a stipulation that the installments or rents paid shall not be returned
to the vendee or lessee shall be valid insofar as the same may not be unconscionable under the circumstances.
The expenses for the execution and registration of the sale shall be borne by the?
Answer: Vendor, unless there is a stipulation to the contrary.

Note: The expropriation of property for public use is governed by special laws.

CAPACITY TO BUY OR SELL

All persons who are authorized in this Code to obligate themselves, may enter into a contract of sale, saving the
modifications contained in the following articles.

Where necessaries are those sold and delivered to a minor or other person without capacity to act,
he must pay a?
Answer: Reasonable price therefor. (Note: Necessaries are those referred to in Article 290)

The husband and the wife cannot sell property to each other, except:
Answer:
(1) When a separation of property was agreed upon in the marriage settlements; or
(2) When there has been a judicial separation or property under Article 191. (1458a)

The following persons cannot acquire by purchase, even at a public or judicial auction, either in person or through the
mediation of another:
Answer:
(1) The guardian, the property of the person or persons who may be under his guardianship;
(2) Agents, the property whose administration or sale may have been entrusted to them, unless the consent of the
principal has been given;
(3) Executors and administrators, the property of the estate under administration;
(4) Public officers and employees, the property of the State or of any subdivision thereof, or of any government-
owned or controlled corporation, or institution, the administration of which has been intrusted to them; this provision
shall apply to judges and government experts who, in any manner whatsoever, take part in the sale;
(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and employees
connected with the administration of justice, the property and rights in litigation or levied upon an execution before
the court within whose jurisdiction or territory they exercise their respective functions; this prohibition includes the
act of acquiring by assignment and shall apply to lawyers, with respect to the property and rights which may be the
object of any litigation in which they may take part by virtue of their profession.
(6) Any others specially disqualified by law.

Note: The prohibitions in the two preceding articles are applicable to sales in legal redemption, compromises and
renunciations.

EFFECTS OF THE CONTRACT WHEN THE THING SOLD HAS BEEN LOST
If at the time the contract of sale is perfected, the thing which is the object of the contract has been entirely lost, the
contract shall be?
Answer: Without any effect.

Iff the thing should have been lost in part only, the vendee may choose between?
Answer:
1.Withdrawing from the contract and
2. Demanding the remaining part, paying its price in proportion to the total sum
agreed upon.

Where the parties purport a sale of specific goods, and the goods without the knowledge of the seller have perished in
part or have wholly or in a material part so deteriorated in quality as to be substantially changed in character, the
buyer may at his option treat the sale as?
Answer:
(1) As avoided; or
(2) As valid in all of the existing goods or in so much thereof as have not deteriorated, and as binding the buyer to pay
the agreed price for the goods in which the ownership will pass, if the sale was divisible.
OBLIGATIONS OF THE VENDOR
General Provisions
The vendor is bound to?
Answer:
1. Transfer the ownership of and
2. Deliver, as well as warrant the thing which is the object of the sale.

The ownership of the thing sold is acquired by the vendee from the moment?
Answer: It is delivered to him in any of the ways specified in Articles 1497 to 1501, or in any other manner signifying
an agreement that the possession is transferred from the vendor to the vendee.

Delivery of the Thing Sold

The thing sold shall be understood as delivered, when it is placed in the control and possession of?
Answer: The vendee

When the sale is made through a public instrument, the execution thereof shall be equivalent to?
Answer: The delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or
cannot clearly be inferred.

With regard to movable property, its delivery may also be made by the delivery of?
Answer: The keys of the place or depository where it is stored or kept.

The delivery of movable property may likewise be made by?

Answer: The mere consent or agreement of the contracting parties, if the thing sold cannot be transferred to the
possession of the vendee at the time of the sale, or if the latter already had it in his possession for any other reason.

Note: There may also be tradition constitutum possessorium.

With respect to incorporeal property, the provisions of the first paragraph of article 1498 shall govern. In any other
case wherein said provisions are not applicable, the placing of the titles of ownership in the possession of the vendee
or the use by the vendee of his rights, with thevendor's consent, shall be understood as a delivery.

When goods are delivered to the buyer "on sale or return" to give the buyer an option to return the goods instead of
paying the price, the ownership passes to the buyer of delivery, but he may?
Answer: Revest the ownership in the seller by returning or tendering the goods within the time fixed in the contract,
or, if no time has been fixed, within a reasonable time.

When goods are delivered to the buyer on approval or on trial or on satisfaction, or other similar terms, the ownership
therein passes to the buyer when?
Answer:
(1) When he signifies his approval or acceptance to the seller or does any other act adopting the transaction;
(2) If he does not signify his approval or acceptance to the seller, but retains the goods without giving notice of
rejection, then if a time has been fixed for the return of the goods, on the expiration of such time, and, if no time has
been fixed, on the expiration of a reasonable time. What is a reasonable time is a question of fact. (n)

When there is a contract of sale of specific goods, the seller may, by the terms of the contract, reserve the right of?
Answer: Right of possession or ownership in the goods (until certain conditions have been fulfilled. The right of
possession or ownership may be thus reserved notwithstanding the delivery of the goods to the buyer or to a carrier
or other bailee for the purpose of transmission to the buyer)

Where goods are shipped, and by the bill of lading the goods are deliverable to the seller or his agent, or to the order
of the seller or of his agent, the seller thereby reserves the ownership in the goods. But, if except for the form of the
bill of lading, the ownership would have passed to the buyer on shipment of the goods, the seller's property in the
goods shall be deemed to be only for?
Answer: The purpose of securing performance by the buyer of his obligations under the contract.

Where goods are shipped, and by the bill of lading the goods are deliverable to order of the buyer or of his agent, but
possession of the bill of lading is retained by the seller or his agent, the seller thereby reserves a right to?
Answer: Right to the possession of the goods as against the buyer.
Where the seller of goods draws on the buyer for the price and transmits the bill of exchange and bill of lading
together to the buyer to secure acceptance or payment of the bill of exchange, the buyer is bound to?
Answer: Return the bill of lading if he does not honor the bill of exchange, and if he wrongfully retains the bill of lading
he acquires no added right thereby.
If, however, the bill of lading provides that the goods are deliverable to the buyer or to the order of the buyer, or is
indorsed in blank, or to the buyer by the consignee named therein, one who purchases in good faith, for value,
the bill of lading, or goods from the buyer will obtain the?
Answer: Ownership in the goods, although the bill of exchange has not been honored, provided that such purchaser
has received delivery of the bill of lading indorsed by the consignee named therein, or of the goods, without notice of
the facts making the transfer wrongful.

Unless otherwise agreed, the goods remain at the seller's risk until the ownership therein is transferred to the buyer,
but when the ownership therein is transferred to the buyer the goods are at the buyer's risk whether actual delivery
has been made or not, except that?
Answer:
(1) Where delivery of the goods has been made to the buyer or to a bailee for the buyer, in pursuance of the contract
and the ownership in the goods has been retained by the seller merely to secure performance by the buyer of his
obligations under the contract, the goods are at the buyer's risk from the time of such delivery;
(2) Where actual delivery has been delayed through the fault of either the buyer or seller the goods are at the risk of
the party in fault.

Subject to the provisions of this Title, where goods are sold by a person who is not the owner thereof, and who does
not sell them under authority or with the consent of the owner, the buyer acquires?
Answer: No better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded
from denying the seller's authority to sell.

Note: Nothing in this Title, however, shall affect:

(1) The provisions of any factors' act, recording laws, or any other provision of law enabling the apparent owner of
goods to dispose of them as if he were the true owner thereof;
(2) The validity of any contract of sale under statutory power of sale or under the order of a court of competent
jurisdiction;
(3) Purchases made in a merchant's store, or in fairs, or markets, in accordance with the Code of Commerce and special
laws.

Where the seller of goods has a voidable title thereto, but his title has not been avoided at the time of the sale, the
buyer acquires?
Answer: A good title to the goods, provided he buys them in good faith, for value, and without notice of the seller's
defect of title.

A document of title in which it is stated that the goods referred to therein will be delivered to the bearer, or to the
order of any person named in such document is a negotiable?
Answer: Negotiable document of title

Note: A negotiable document of title may be negotiated by delivery:

(1) Where by the terms of the document the carrier, warehouseman or other bailee issuing the same undertakes to
deliver the goods to the bearer; or
(2) Where by the terms of the document the carrier, warehouseman or other bailee issuing the same undertakes to
deliver the goods to the order of a specified person, and such person or a subsequent endorsee of the document has
indorsed it in blank or to the bearer.

Where by the terms of a negotiable document of title the goods are deliverable to bearer or where a negotiable
document of title has been indorsed in blank or to bearer, any holder may indorse the same to?
Answer: Himself or to any specified person, and in such case the document shall thereafter be negotiated only by the
endorsement of such endorsee.

Note: A negotiable document of title may be negotiated by the endorsement of the person to whose order the goods
are by the terms of the document deliverable. Such endorsement may be in blank, to bearer or to a specified person. If
indorsed to a specified person, it may be again negotiated by the endorsement of such person in blank, to bearer or to
another specified person.

Subsequent negotiations may be made in like manner.

If a document of title which contains an undertaking by a carrier, warehouseman or other bailee to deliver the goods
to bearer, to a specified person or order of a specified person or which contains words of like import, has placed upon
it the words "not negotiable," "nonnegotiable" or the like, such document may nevertheless be negotiated by?
Answer: The holder and is a negotiable document of title within the meaning of this Title. But nothing in this Title
contained shall be construed as limiting or defining the effect upon the obligations of the carrier, warehouseman,
or other bailee issuing a document of title or placing thereon the words "not negotiable," "nonnegotiable," or the
like.

A document of title which is not in such form that it can be negotiated by delivery may be transferred by the holder
by?
Answer: Delivery to a purchaser or donee.

A non-negotiable document cannot be negotiated and the endorsement of such a document gives the transferee?
Answer: Gives no additional right.

Art. 1512. A negotiable document of title may be negotiated by?

(1) By the owner therefor; or
(2) By any person to whom the possession or custody of the document has been entrusted by the owner, if, by the
terms of the document the bailee issuing the document undertakes to deliver the goods to the order of the person to
whom the possession or custody of the document has been entrusted, or if at the time of such entrusting the
document is in such form that it may be negotiated by delivery.

A person to whom a negotiable document of title has been duly negotiated acquires?
Answer:
(1) Such title to the goods as the person negotiating the document to him had or had ability to convey to a purchaser
in good faith for value and also such title to the goods as the person to whose order the goods were to be delivered by
the terms of the document had or had ability to convey to a purchaser in good faith for value; and
(2) The direct obligation of the bailee issuing the document to hold possession of the goods for him according to the
terms of the document as fully as if such bailee had contracted directly with him.

A person to whom a document of title has been transferred, but not negotiated, acquires thereby, as against the
transferor, the?
Answer: Title to the goods, subject to the terms of any agreement with the transferor.

If the document is non-negotiable, such person also acquires the right to?
Answer: Right to notify the bailee who issued the document of the transfer thereof, and thereby to acquire the direct
obligation of such bailee to hold possession of the goods for him according to the terms of the document.

Prior to the notification to such bailee by the transferor or transferee of a non-negotiable document of title, the title
of the transferee to the goods and the right to acquire the obligation of such bailee may be defeated by?
Answer: The levy of an attachment of execution upon the goods by a creditor of the transferor, or by a notification to
such bailee by the transferor or a subsequent purchaser from the transfer of a subsequent sale of the goods by the
transferor.

Where a negotiable document of title is transferred for value by delivery, and the endorsement of the transferor is
essential for negotiation, the transferee acquires a right against the transferor to compel him to?
Answer: To endorse the document unless a contrary intention appears. The negotiation shall take effect as of the time
when the endorsement is actually made.

A person who for value negotiates or transfers a document of title by endorsement or delivery, including one who
assigns for value a claim secured by a document of title unless a contrary intention appears, warrants that?
Answer:
(1) That the document is genuine;
(2) That he has a legal right to negotiate or transfer it;
(3) That he has knowledge of no fact which would impair the validity or worth of the document; and
(4) That he has a right to transfer the title to the goods and that the goods are merchantable or fit for a particular
purpose, whenever such warranties would have been implied if the contract of the parties had been to transfer
without a document of title the goods represented thereby.

The endorsement of a document of title shall not make the endorser liable for any failure on the part of?
Answer: The bailee who issued the document or previous endorsers thereof to fulfill their respective obligations.

It is not impaired by the fact that the negotiation was a breach of duty on the part of the person making the
negotiation, or by the fact that the owner of the document was deprived of the possession of the same by loss, theft,
fraud, accident, mistake, duress, or conversion, if the person to whom the document was negotiated or a person to
whom the document was subsequently negotiated paid value therefor in good faith without notice of the breach of
duty, or loss, theft, fraud, accident, mistake, duress or conversion.
Answer: The validity of the negotiation of a negotiable document of title

If goods are delivered to a bailee by the owner or by a person whose act in conveying the title to them to a purchaser
in good faith for value would bind the owner and a negotiable document of title is issued for them they cannot
thereafter, while in possession of such bailee, be attached by garnishment or otherwise or be levied under an
execution unless the document be first?
Answer: Surrendered to the bailee or its negotiation enjoined. The bailee shall in no case be compelled to deliver up
the actual possession of the goods until the document is surrendered to him or impounded by the court.

A creditor whose debtor is the owner of a negotiable document of title shall be entitled to?
Answer: Such aid from courts of appropriate jurisdiction by injunction and otherwise in attaching such document or in
satisfying the claim by means thereof as is allowed at law or in equity in regard to property which cannot readily be
attached or levied upon by ordinary legal process.

Whether it is for the buyer to take possession of the goods or of the seller to send them to the buyer is a question
depending in each case on the contract, express or implied, between the parties. Apart from any such contract,
express or implied, or usage of trade to the contrary, the place of delivery is the?
Answer: Seller's place of business if he has one, and if not his residence; but in case of a contract of sale of specific
goods, which to the knowledge of the parties when the contract or the sale was made were in some other place, then
that place is the place of delivery.

Where by a contract of sale the seller is bound to send the goods to the buyer, but no time for sending them is fixed,
the seller is bound to send them within?
Answer: A reasonable time.

Where the goods at the time of sale are in the possession of a third person, the seller has not fulfilled his obligation to
deliver to the buyer unless and until?
Answer: Such third person acknowledges to the buyer that he holds the goods on the buyer's behalf.

Note: Demand or tender of delivery may be treated as ineffectual unless made at a reasonable hour.
What is a reasonable hour is a question of fact.

Unless otherwise agreed, the expenses of and incidental to putting the goods into a deliverable state must be borne by
the?
Answer: Seller

Where the seller delivers to the buyer a quantity of goods less than he contracted to sell, the buyer may?
Answer: Reject them, but if the buyer accepts or retains the goods so delivered, knowing that the seller is not going to
perform the contract in full, he must pay for them at the contract rate.

If, however, the buyer has used or disposed of the goods delivered before he knows that the seller is not going to
perform his contract in full, the buyer shall not be liable for?
Answer: For more than the fair value to him of the goods so received.

Where the seller delivers to the buyer a quantity of goods larger than he contracted to sell, the buyer may?